Why Do They Call It ‘Insurance’?

Geoffrey Norman

July 18, 2013 8:34 AM

Critics of Obamacare point to the way in which it disconnects risk from price. As, for instance, with guaranteed issue. You can't be turned down if you are already ill or, even, be charged higher premiums that reflect your condition. This is ordinarily the hard reality of insurance. Higher risk; higher premium.

In the case of health care, it seems virtually self-evident that smokers should pay higher premiums since they engage in high risk behavior by choice.

The law, however, allows the states to decide whether or not to charge higher premiums for smokers. And, as Michelle Andrews at the Kaiser Institute writes:

Since smokers' health-care costs tend to be higher than those of nonsmokers, is it reasonable for smokers to pay higher premiums when they buy insurance through the new state marketplaces that are scheduled to open in October? A handful of states and the District say the answer is no.

So in those jurisdictions, a young man who pumps iron, runs marathons, gobbles vitamins, carries mere ounces of fat on his body, sleeps eight hours every night, and never touches alcohol or tobacco will be subsidizing 50-somethings who are fat, sedentary, and smoke a pack a day.